I find small caps like this in the U.S. largely unattractive, but interesting as your reader pointed out, as an intellectual exercise.
You can find dozens of similar sized companies in Japan that are in chemicals that are net nets that pay higher dividends, better growth, and lower P/E. Much lower interest rates in Japan too, so opportunity cost is sub 1% vs 5.3% in the U.S.
Small/Nano caps need growth to be interesting in the U.S. imo. Cheapish no growth / shrinking U.S. nano caps are a pass for me.
Thank you for the write up though. I love reading about companies like this and hope it does work out.
Thanks Altay. I agree that most similar U.S. listings are 100% unattractive. I have little interest in the CI/ML side of this business. I think pharmaceuticals growing at 5-10% annually with pricing power is interesting. Ideally looking for this illiquid name to dump well beyond what that + investments are worth. Likely not going to ever get cheap enough where I truly feel compelled to act in a serious way. Nonetheless, the exercise is fun an continues.
I also very much agree with you that Japan has lots of interesting net nets. I've loved following your writings and the recent government-induced actions as potential catalysts make the basket all the more interesting. Thanks for commenting!
It’s not that “Are Cosmetic Ingredients and Medical Lubricants truly worth nothing?” But I think the fact (to me) that management said decrease demand and competition with lower priced product... if that so, why purchase from UG when you can get the same things on the home land for less and probably with more advantages being local🤔
I don't disagree that CI is clearly under heightened competitive pressure. My core thesis as an investment is to ideally wait until (if) the entire company becomes priced at less than what I believe pharmaceuticals to be worth. Then Cosmetics becomes much less of a concern with outcomes skewing much further to the upside.
No idea what the odds are. They had their strategic eval early last year which concluded with nothing. Rudderless ship. Just trying to figure out how cheap is 'cheap' for pharmaceuticals.
I find small caps like this in the U.S. largely unattractive, but interesting as your reader pointed out, as an intellectual exercise.
You can find dozens of similar sized companies in Japan that are in chemicals that are net nets that pay higher dividends, better growth, and lower P/E. Much lower interest rates in Japan too, so opportunity cost is sub 1% vs 5.3% in the U.S.
Small/Nano caps need growth to be interesting in the U.S. imo. Cheapish no growth / shrinking U.S. nano caps are a pass for me.
Thank you for the write up though. I love reading about companies like this and hope it does work out.
Thanks Altay. I agree that most similar U.S. listings are 100% unattractive. I have little interest in the CI/ML side of this business. I think pharmaceuticals growing at 5-10% annually with pricing power is interesting. Ideally looking for this illiquid name to dump well beyond what that + investments are worth. Likely not going to ever get cheap enough where I truly feel compelled to act in a serious way. Nonetheless, the exercise is fun an continues.
I also very much agree with you that Japan has lots of interesting net nets. I've loved following your writings and the recent government-induced actions as potential catalysts make the basket all the more interesting. Thanks for commenting!
It’s not that “Are Cosmetic Ingredients and Medical Lubricants truly worth nothing?” But I think the fact (to me) that management said decrease demand and competition with lower priced product... if that so, why purchase from UG when you can get the same things on the home land for less and probably with more advantages being local🤔
I don't disagree that CI is clearly under heightened competitive pressure. My core thesis as an investment is to ideally wait until (if) the entire company becomes priced at less than what I believe pharmaceuticals to be worth. Then Cosmetics becomes much less of a concern with outcomes skewing much further to the upside.
Fair enough, I was also thinking, how likely is it that the board (Mr Globus) will just sell company 🤔
No idea what the odds are. They had their strategic eval early last year which concluded with nothing. Rudderless ship. Just trying to figure out how cheap is 'cheap' for pharmaceuticals.